The Real Estate Act, 2016

It was passed in 2016 with the objective of ensuring regulation and promotion of real estate sector in an efficient and transparent manner and to protect the interest of home buyers.

The core features of the act are as following –

• It regulates transactions between buyers and promoters of real estate projects.
• It provides for establishment of state level regulatory authorities called Real Estate Regulatory Authorities (RERAs).
• Real estate projects need to be registered with RERAs. Promoters cannot book or offer these projects for sale without registering them. Real estate agents dealing in these projects also need to register with RERAs.
• The promoters must upload details of the project on the website of the RERA. These include the site and layout plan, and schedule for completion of the real estate project etc.
• 70% of the amount collected from buyers for a project must be maintained in a separate bank account and must only be used for construction of that project only. The withdrawals have to be certified by architects, CA and project engineers.
• The Act stipulates that the appropriate government should establish the Real Estate Appellate Tribunal by May 01, 2018. Adjudicating officers, Real Estate Authorities and Appellate Tribunals shall dispose complaints within 60 days.
• As on 23rd July, 2021, 30 States/UTs have set up Real Estate Regulatory Authority and 67,669 Real Estate Projects and 52,284 Real Estate Agents have been registered under RERA.
• RERA has been effective in redressing the grievances of consumers. As per information provided by State/UTs, 70,601 complaints have been disposed off by Real Estate Regulatory Authorities till 23rd July, 2021.

Significance of the Act

• Effectively regulates and promotes the development of real estate sector
• Works as an adjudicating mechanism for speedy dispute redressal
• Protects the interest of consumers in the real estate sector and prevent their exploitation
• Ensures transparency in the real estate business and eradicates the existing discrepancies and problems within the real estate sector

Limitations of the Act

• Inability to create equal footing as small and medium builders or projects might face problems due to provisions of the Act such as deposition of 70% amount in escrow account. Regulation requires approvals and permissions which may result in delay of completion of projects.